Hi there,

Have you ever looked at a piece of modern art and snorted in derision?

Yeah, we’ve all done it. 

So did New York Times Magazine columnist Rob Walker. In the summer of 2006, he wondered why some things cost significantly more than others when they offer the same functional benefits. 

He decided that the value isn’t inherently in the objects themselves but in the meaning or the story they represent to their owner. 

Walker decided to test his hypothesis. He began buying cheap, worthless items at yard sales and thrift shops. A plastic banana. A lost hotel room key. Each costs about $1-$4. He approached some writers and asked them to write a short story that contained one of the objects. 

The results were staggering when he put up the objects and their stories on eBay. On average, the value of the objects rose 2700%!

“A miniature jar of mayonnaise purchased for $1 sold for $51.00. A cracked ceramic horse head purchased for $1.29 sold for $46.00. The value of these formerly abandoned or forsaken objects suddenly and mysteriously skyrocketed when a story accompanied them.”

Walker’s experiment gives us a tangible example of how the human mind perceives value. A shoe is a shoe until it’s a pair of TOMS shoes. For every pair you buy, a child in need is getting one. We love being a part of such narratives because of their meaning to people’s images of us. And that’s something we’re willing to pay for. 

At that exact intersection of storytelling and value lies your pricing power. 

In this week’s Compass, we’re looking at SaaS pricing and why you should spend more time worrying about it.